…Traction: We need to see some revenue or in the worst case scenario, enough usage that could be a proxy for revenue — we do not fund ideation. We mostly look at companies that are generating revenue — for some online companies that are pre-revenue, we can make an exception if they otherwise have a critical mass of users. By critical mass, I mean it would be enough to generate a five-figure ad revenue within a year if they were going that route.
I had the pleasure of interviewing Tara Sabre Collier, an impact investor with a background in strategy, entrepreneurship and international development. She worked for over 15 years across 20 countries with leading multilateral organizations, bilateral donor programmes and multinational corporations, philanthropic and impact investment funds including the World Bank, the International Finance Corporation, Ernst & Young, Shell Foundation and GroFin Capital. She earned her MBA from Oxford University, her MPA from New York University and her BA from Spelman College.
Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what made you decide to become an angel or VC?
When I was in my 20s working for the World Bank, I was given an opportunity to consult remotely in Brazil. While there I started working on a project to train young Afro-Brazilan entrepreneurs. It occurred to me that I couldn’t train entrepreneurs without lived experience of launching a business.
I ended up starting my first company in Rio de Janeiro, an economic development consultancy. As three women of African descent, we had a specific interest in training other entrepreneurs from under-represented backgrounds as a means to building more inclusive economic development, as well as training over 2,000 entrepreneurs across USA, Latin America and Africa.
Despite their brilliance, innovative ideas and expertly-crafted plans, many of the entrepreneurs I helped were further hindered by capital access, especially for entrepreneurs with indigenous and Afro-descendant backgrounds. That’s why I decided to pursue my MBA and go into impact investing: to help bridge the gap so more of the brightest entrepreneurs will have the capital and support to solve the biggest problems for our communities and countries.
What you are doing is not very common. Was there an “Aha Moment” that made you decide that you were going to focus on social impact investing in particular? Can you share the story with us?
I learned about social entrepreneurship just as it was emerging as a more sustainable business model for us to co-create more inclusive economies and a healthier planet. At the time, leading organizations such as Ashoka, Endeavor, Acumen Fund, the Skoll Foundation, and of course the Skoll Centre for Social Entrepreneurship, were doing immense field building.
So with my first company, the social mission of inclusive economic development was part of the fabric from the beginning. In training over 2,000 entrepreneurs, we saw many social businesses reach commercial success while likewise achieving a social mission. Because I saw many of these companies struggle with lack of capital, it was only natural that I would want to specifically become an impact investor. I was actually pulled more into the field because of my personal quest for social impact. However, when I invest on behalf of our family, I am still seeking returns of at least 15%!
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?
I wish I could say there’s a tipping point but to be honest, I think that success comes in waves and spirals and rarely in straight lines. And I think that we are always evolving and our goals and vision for impact is likewise also evolving.
Yes, when I started my first company 11 years ago, we were training agribusiness startups and cooperatives in Peru and Angola and women-led handicraft companies in Brazil — these were small-scale companies that couldn’t absorb more than 20, 30, maybe 50 grand at a stretch. My target was to help create 10,000 jobs, which I saw then as a massive win for economic empowerment in Africa, the African Diaspora and for fellow indigenous people.
At GroFin, we typically were funding SMEs that could be about 300,000 — as these are bigger businesses, they were already creating over 100,000 jobs.
With Shell Foundation, we fund across growth stages, which can reach up to multi-million dollar rounds and these companies have created over half a million jobs.
Yet now I am also realizing that there’s a huge gap in finding financially viable ways to serve the earlier-stage companies, considering that women-led and BIPOC-led companies have disproportionate barriers in getting past seed stage. This has led me to look again at earlier stages and smaller rounds and creating financial inclusion for brilliant underserved entrepreneurs — not the big headline of hundreds of thousands of jobs. It is a journey and there are limitless ways to make an impact.
None of us are able to achieve success without some help along the way. Is there a particular person or mentor to whom you are grateful who helped get you to where you are? Can you share a story about that?
I have had too many mentors to thank. However, Pamela Hartigan has probably had the biggest impact on my trajectory. When I was running my small company in Rio, earning in Brazilian reais, with no finance experience, she took a chance on me and my dream. She gave me a full scholarship to study at Oxford University as a Skoll Scholar and it opened the door to transition from being a social entrepreneur to being an impact investor.
In a world where women of African descent earn 62 cents for every dollar earned by our white male counterparts, it can be hard to find people who want to bet on you, who will take a stand to ensure you have opportunities to shine — that is why I will forever be grateful to Pamela and every other mentor or sponsor who believed in me. That is also why I always try to make time to mentor other women of African and indigenous descent. My schedule is intense with a full-time job at Shell Foundation, a part-time role at Oxford University and launching our family investment firm — but I always have to find a way to mentor and be the change.
You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure?
Build technical finance skills as early and as much as you can. Try to adapt to the times by linking tech to your skills development, for example learning coding to enhance your financial modeling ability.
This will make you more employable and empowered.
Also reach Lynchpin and the Startup of You — we are in an economy that will increasingly require multidisciplinary thinking, EQ and re-invention along with the technical skills I already mentioned.
Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
A few years ago, we co-created a venture network to change the face of VC. Our network included over 100 angels and VCs, almost entirely BIPOC and/or women. Through the network, we syndicated millions in early-stage deals and we continue to share investment opportunities for BIPOC and women-led startups.
Like VC and philanthropy, impact investing has a representation problem, with disproportionately low BIPOC presence in investment teams and portfolios. In the wake of the BLM uprising, the impact investment ecosystem is grappling with how to better handle racial equity and I am helping my institution explore these issues and create policies to address it, such as targets and partnerships. I am also part of the Advisory Board for the Racial Equity Index which will track impact investors and international development funders and push the sector to greater inclusiveness.
Most importantly, I have created Elinor, a family-run investment firm that backs high-impact start-ups led by under-represented entrepreneurs, especially women of color.
You are a VC who is focused on investments that are making a positive social impact. Can you share with us a bit about the projects and companies you have focused on, and look to focus on in the future?
I have worked with companies in a wide range of sectors but for the past several years, agriculture value chains and off-grid energy have been most central to my work at Shell Foundation. With Elinor, I can clearly see health tech and education emerging as key sectors in the current pipeline.
In general, which business sectors excite you most and which sectors do you look to invest in?
I am excited about technologies that can innovate health, education, agribusiness and logistics.
Can you share a story with us about your most successful Angel or VC investment? Or an investment that you are most proud of? What was its lesson?
In 2017, we backed (as part of a syndicate) a ride hailing company that would be going to head-to-head with Uber, the market leader. In general, both companies bring tremendous value to consumers but obviously, Uber had first-mover advantage. They also had a notorious bro culture, potentially exploitative surge pricing and were involved in rape cases and other scandals in a few different countries.
We backed the newcomer, the “David” against Uber’s Goliath for a few reasons. We believed there was still room in the market to grow, and that there was a subset of consumers that would pick the newcomer because of a difference in values. As a woman, I was also impressed that the company had a relatively gender-equitable C-suite (relative to the rest of the tech sector).
So along with our syndicate we bet on an underdog which had a cleaner track record, seemed more gender-smart, and more transparent with its pricing — it was listed on NASDAQ in 2019.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
We have had some hard knockbacks but they involve my co-founder or other investors or my employer and I would have to get their consent to have any reference to these incidents in the public domain — sorry.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
There are many companies I’ve had to turn down due to limited fit with fund criteria. I can’t say any of them became unicorns but I still wish I could have found a way to do more for them.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why? Please share a story or example for each.
Innovation: We are not a bank so do not simply fund any company that needs money. There has to be innovation that would allow greater efficiency, more competitive pricing or significantly larger scale.
Scale: We need to see a pathway to reaching upwards of 2 million users for most B2C companies — not in the first year of course but within 5 would be great. This will feed into later analysis about probability of exit.
Traction: We need to see some revenue or in the worst case scenario, enough usage that could be a proxy for revenue — we do not fund ideation. We mostly look at companies that are generating revenue — for some online companies that are pre-revenue, we can make an exception if they otherwise have a critical mass of users. By critical mass, I mean it would be enough to generate a five-figure ad revenue within a year if they were going that route.
Team: We need to see all key functions are covered and then we look for excellence in individual functions and synergies they can bring working together. The team is like a wheel. If the CEO is the core, the rest of C-suite is are the spoke. If you are missing key spoke, the wheel will fumble and not roll smoothly. So in analyzing the team, I first make sure they cover CEO, CTO, CFO, CMO or BizDev Lead and COO — they may not use these titles but they should cover these functions. Within the leadership team, I look for a track record of success, useful affiliation, past innovations and how long they’ve worked together and what they’ve produced together.
Market alignment: We need to see their product/service aligns with a market gap that is currently unmet or not adequately served by incumbent players. We need to see positive responses from the market validating their hypothesis of a market need, this may be usage or it may be corporate or government partnerships.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Remaking capitalism in a more inclusive and ecologically responsible way.
If you could tell other young people one thing about why they should consider making a positive impact on our environment or society, like you, what would you tell them?
It is a marathon, not a sprint.
We build our legacy over a lifetime. It can be an arduous road but our challenges are minimal compared to the adversities our ancestors faced. So think of them when it feels difficult, put one foot in front of the other and play the long game.
We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch with, and why? He or she might just see this. 🙂
Too many to count! I will limit it to Barack Obama, George Soros and Arlan Hamilton.
How can our readers further follow your work online?
My LinkedIn page.
Thank you so much for this. This was very inspirational, and we wish you only continued success!